Common questions include: "If the tenant doesn't transfer the water, electricity, and gas accounts, will there be no record?"
Instead of guessing "whether it will be discovered," it's more practical to first understand: what footprints the system itself naturally leaves, and what feasible approaches exist.
1｜"Not Transferring Utilities" Does Not Eliminate Institutional Footprints
Even if tenants do not transfer utility accounts, rental activities in Hong Kong will still leave records due to statutory or practical procedures, commonly including:
1) Lease Stamping (Stamp Duty)
Residential leases generally need to be stamped within 30 days after signing. An unstamped lease has significantly reduced effectiveness in civil proceedings, which is disadvantageous for rent recovery and contract enforcement. In practice, most landlords still choose to stamp the lease to protect their rights and interests.
2) Rating and Valuation Department CR109 (New/ Renewed Tenancy)
After a new or renewed tenancy, it is usually necessary to submit CR109 to the Rating and Valuation Department for endorsement within one month; late submission requires payment of a fixed additional fee. Before endorsement is obtained, legal action for rent recovery under that tenancy agreement generally cannot be initiated in court.
3) Land Registry (Whether Registration Applies Case-by-Case)
Residential leases of three years or less may not be registered with the Land Registry; however, if a lease or memorandum of lease is registered, a search may reveal relevant records. Banks, when handling refinancing, top-up loans, or other mortgage arrangements, may also conduct searches and verify documents. Do not assume that "it will definitely not be found."
Key point: The system does not rely on a single indicator (such as utilities); rental activities often leave records through multiple legal procedures.
II｜High Loan-to-Value Mortgage Core Requirement: Understanding "Owner-Occupied" Rather Than Guessing Boundaries
The core requirement of mortgage insurance is owner-occupied (using the property as the primary residence). Whether it meets this is determined based on individual case circumstances, documents, and actual living arrangements.
It is important to note that:
- Even if the owner still resides in the unit, using the property (in whole or in part) for rental purposes may still trigger compliance concerns from the bank or the mortgage insurance provider;
- The safest approach is always to inquire with the mortgage bank in advance about whether approval or exemption needs to be applied for.
Three｜Three Compliant Practices
Option 1｜Apply to the Mortgage Insurance Provider Through the Bank for "Exemption from Occupancy Requirement"
Suitable for: Mortgage insurance is still valid, but there is a practical need to move out (e.g., family changes, work arrangements)
- Submit the application through the original mortgage bank (the mortgage insurance provider will review on a case-by-case basis)
- General requirements: Good repayment record, primarily residing in Hong Kong, no other local residential properties, etc.
- Important: Do not enter into a lease with tenants before the exemption is approved
This is subject to case-by-case approval, and whether it is granted depends on the actual situation and supporting documents; there is no publicly available success rate.
Option 2｜Adjust the Mortgage Arrangement to "No Longer Rely on Mortgage Insurance" Before Renting Out
Suitable for: Those willing to reduce leverage in exchange for rental flexibility
- Discuss with the bank to adjust the loan structure to no longer require mortgage insurance (e.g., lower the loan-to-value ratio, refinance to a suitable product)
- After completing the adjustment, apply to the bank for written consent for rental according to the mortgage deed
- Proceed with the tenancy agreement through the usual process (stamping, CR109)
Feasibility and conditions depend on bank approval and the current market situation.
Option 3｜Continue Living in the Property, Wait for Mortgage Insurance to Exit Naturally, Then Apply for Renting
Suitable for: Those not in a hurry to rent out
- Continue living in the property and make repayments as scheduled
- When the loan structure no longer requires mortgage insurance (e.g., after repaying the loan or completing structural adjustments)
- Then apply to the bank for written rental consent, and proceed with renting out normally
Frequently Asked Questions
Q｜Is it always a violation if I sublet only one room and still live there myself?A｜The core of mortgage insurance is "owner-occupation." Even if you still reside in the unit, if it involves rental income, it may still raise compliance concerns. The safest approach is to inquire with your bank in advance about whether approval or exemption is needed.
Q｜Is the success rate for exemption applications high?A｜This is assessed on a case-by-case basis, depending on the reasons, supporting evidence, and repayment history. There is no publicly available success rate.
Q｜If found not meeting the owner-occupation requirement, are the consequences always the same?A｜This is handled on a case-by-case basis. The bank may require proof, demand immediate repayment, and handle any fees arising from the breach; if it involves false documents or severe circumstances, it might be referred to law enforcement agencies. This is not an inevitable process.